Archive for October, 2010

Municipal golf courses are often viewed as the entry door to golfâ€”their stereotype is inexpensive, affordable golf.Â Average course conditions, small clubhouses, and limited food service catering to season pass holders, seniors, juniors, and new golfers have been their historical brand image.

During the past decade, this stereotype has changed, as many municipal courses now offer high-quality experiences.Â To illustrate, within the last 15 years, 14 municipal courses were built within 30 miles of Denver.Â Those municipal courses are all focused on providing a “country-club-for-a-day” experience.

A few have thrived.Â Many are now struggling.Â One merely needs to create a Google Alert for “Golf Courses Losing Money” to receive a plethora of emails highlighting the challenges faced nationally.

As a result, municipalities are now unloading in bulk the operation of their golf courses.Â During the first seven months of 2010, 69 requests for proposals representing nearly 175 golf courses (about 8% of municipal golf courses) have been issued seeking third-party management.Â Detroit, Memphis, Omaha, San Francisco, Seattle, Tampa, Toledo, Virginia Beach, Georgia, Kentucky, and New York are examples of what is becoming a sweeping trend.

Why the Sudden Shift?

Up until the early 1980s, most municipal courses were managed 100% by municipalities.Â With the advent of management companies in the late 1980s, these firms were retained, they paid the cities a lease fee, and they benefited from the earnings with profits shared, in some cases, above certain thresholds.

With the boom in golf in the late 1990s, municipalities, witnessing the profit that could be made, opted to pay management companies a flat fee upwards of $200,000 while retaining the profits for the cities’ coffers.

Unfortunately, many municipalities didn’t fully comprehend the difficulty of creating a value-based golf experience while generating sufficient cash flow to offset the bond payments hidden within their often inefficient organizational structure.Â When combined with a declining tax revenue base and softness in the golf industry, municipalities are now hoping to revert to late 1980s model of leasing, one in which third parties assume the capital and operational risk.

The Inherent Challenges of Municipal Management

The management of a municipal golf course usually takes one of three forms:Â solely city employees, leases with concessionaires, or management companies who now manage more than 1,300 golf courses, or about 8% of all courses in the United States.

There are frequent debates as to the best structure.Â When using employees, the swing of quality will hit both extremes from outstanding dedicated employees to those merely “punching the clock.”Â Leasing to individual concessionaires often can also produce less than desirable results.Â Concessionaires are for-profit entities, and as such they create a natural conflict of interest between scope of services and efficiency of operations.Â Management companies, such as Billy Casper and Kemper Sports Management, are the leaders in providing a viable alternative for municipal management.Â Third-party companies can often provide the expertise and the economies of scale that may be afforded by operating multiple properties.

These discussions as to the best structure often overlook the many significant disadvantages of operating a municipal course.

First, a municipal golf course has to overcome the brand image of being a “muni.”Â The heyday of municipal golf construction was the Eisenhower years, and many of the buildings and courses look their age.Â The cost to repair the infrastructure (and the image) nearly equals the cost of building a new golf course.

Other significant disadvantages include:

The payroll cost structure is higher than incurred by daily-fee courses.Â Fringe benefits and retirement packages can aggregate up to 30% of base salaries. With higher labor costs, municipalities are often forced to reduce marketing and capital investment.

Labor issues are far stricter. The process of hiring (job postings, interviews, testing, physical exams, etc.) is cumbersome.Â As for firing someone, it is nearly impossible.Â With the exception of drug, alcohol, or theft issues, it could take at least six months to terminate an employee for mere non-performance or tardiness.

Where labor unions are present, the problems are exponentially more complex. Salaries are fixed, overtime rates are often double, and work schedules are firm.Â Maintenance crews, for example, are often limited as to what trees they can trim, as is the case in the city of St. Paul, Minnesota.Â For the city of Midland, Michigan, labor union rules dictate that seasonal workers can be hired for up to six months in what is a 7 Â½-month golf season.Â Concessions are delayed in opening or close early.Â Many times other departments of a municipal complex must be scheduled and charge the golf course fully absorbed rates that far exceed those of the private sector.

Rate adjustments take at least 45 days. Because they operate in a public forum ultimately accountable to the taxpayers, approval is required for all material decisions regarding fees and expenses that exceed a threshold ($15,000 in most cities).

Because of the inflexibility on rates, Directors of Golf are effectively precluded from proactively adjusting rates to match demand.

Politics. The influence of golfers on elected City officials, particularly Commission or Council members, should not be underestimated.

Golfers are taxpayers who frequently demand low-priced season passes, improved conditions, and better service. If councilmen or mayors balk, they might find themselves on the wrong end of en election with a vocal and passionate constituency (golfers) as occurred two years ago in the city of Ann Arbor, Michigan.Â A last minute write-in candidate almost beat an incumbent council person who oversaw the golf operations.

As a municipality, the course is constantly expected to provide a wide range of services that are not profitable. Golf camps, youth education programs, and the donation of the course for community-sponsored events are frequent distractions.

Procurement is cumbersome, requiring a lengthy bidding process, and there is no assurance that the best vendor will be selected.Â A municipal bid takes from 60 days to six months.Â Ann Arbor lost its water pump for the 10 months it took to procure a replacement, and hand watering at higher labor costs was needed in the interim.

The financial information of a golf course is in the public domain. One of the competitive advantages of a private business is the ability to mask your revenues and expenses from your customers. Municipalities don’t have that luxury.

The Impact of New Custodians of the Entry Door to the Game

There are many ramifications to the recent rush to privatize municipal golf management.

Due to the extent that a city attempts to transfer the risk of management, requires significant investment, and seeks to retain control over prices, no responsive offers may be received, as was the case recently with the County of Los Angeles, further burdening taxpayers.

As more efficient management is introduced to municipal golf courses, daily fee owners will continue to loathe their municipal brethren, citing significant cost advantages (access to capital, exempt from property taxes, lower utility costs, etc.) and continue their cry for a level playing field.

What is for sure is that the daily fee owners who lack a strategic vision, who don’t fully understand the customers they serve, and who fail to create a value-based experience that equals the fees assessed will face continued customer attrition that will threaten their survival.

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers â€” those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Clubs of any size, particularly those with multiple facilities and a wide array of amenities, usually have a Facility Manager or Maintenance Chief who is responsible for the maintenance and housekeeping functions.Â Depending upon the size and age of the facilities, the responsibilities of this position can be large and complex.Â As the General Manager, here are my expectations for this key department head:

Documented Building Systems.Â All building systems to include electrical; water and sewer; heating, ventilating, and air conditioning (HVAC); fire safety pull boxes; electrical meters and labeled electrical panels; kitchen fire suppression systems; security systems; phone, data, and POS systems; and public address and music systems must be detailed in an easy-to-access, written form, compiled in multiple three-ringed binders for each department heads.Â This information is critical in any sort of emergency and must be available to the manager-on-duty, as well as all department heads.

Building, Systems, and Equipment Reference material.Â For maintenance and repair purposes the Facility Manager must have an organized, easy-to-access library of material to include:Â Architectural As-built Drawings of all buildings that include floor plans, building mechanical, electrical, plumbing, and safety systems; Operation and Maintenance (O&M) Manuals for all systems and major pieces of equipment; Paint Schedules for all buildings; and Maintenance Contracts for all contracted services such as elevator and HVAC servicing, waste removal, and cleaning of kitchen fire suppression systems

Written Standards, Policies, and Procedures (SPPs) for maintenance and housekeeping responsibilities.Â These will serve as the basis for consistent training and execution of all requirements.Â This is particularly important for housekeeping.Â Don’t expect that each housekeeper will have an appropriate or consistent way of cleaning or know what standards are required.Â In addition to providing cleaning standards for all areas of the club, the SPPs will specify cleaning equipment, tools, and products to be used.

A Prioritized Work Order Program to allow necessary maintenance, repair, and new work to be reported and tracked.

A detailed Preventive Maintenance Program and Schedule based on the requirements of system and equipment O&M guidance.

An Outreach Program whereby the Facility Manager visits each club department head on a monthly basis to discuss needs and issues.

Formal Inspections.Â Monthly for all departmental areas to identify maintenance and housekeeping needs.Â Annually for structures, building systems, and grounds.Â These should be documented with standardized inspection forms or checklists to ensure everything is covered.

Monthly Maintenance/Housekeeping Meeting with the General Manager to review work plan and goals, budget, benchmarks, inspections, and maintenance and housekeeping efforts.

Administration of Club and Departmental Assets.Â This includes maintaining the Master Asset List and assisting department heads in performing the Annual Asset Inventory.Â Reporting inventory results to the General Manager.

While this list of expectations lays out a comprehensive summary of responsibilities, given the cost of the club’s physical plant and the need to keep it well-maintained and clean, it is extremely important that the Facility Manager has a complete understanding of the requirements of the position.Â Once these disciplines are firmly established, the maintenance and cleanliness of the club’s facilities will become routine.Â The result of this is a higher state of maintenance and housekeeping, lower costs, and fewer breakdowns and emergency repairs.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers â€” those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

There is probably no area of club management that is more fraught with legal and liability issues than Human Resources due to extensive and detailed government regulation and the potential for problems from poorly trained managers violating employee rights.

While it’s important to spell out the General Manager’s requirements for all department heads, having clear expectations for the Human Resource Manager should be the highest priority.Â Here are my requirements:

Written Job Descriptions for all club positions.Â These have important implications during the hiring process to ensure the right person with the right skill set is hired for each position, as well as providing the basis for employees to understand the club’s expectations of them.

Written Standards, Policies, and Procedures (SPPs) for all aspects of the human resource function.Â Not only is this important for consistency sake, but also as a tool to train managers and supervisors on the legal requirements and consequences of failing to follow them.

Written requirements for Recruiting, the Hiring Process, and a Flow Chart of Actions and decisions.Â This must cover all necessary paperwork, regulatory requirements, and potential problems areas.

Written Employee Disciplinary Procedures and Documentation to ensure all managers and supervisors have a thorough understanding of processes, paperwork, and issues.

Employee Orientationsâ€“both a general club orientation and specific departmental orientations to spell out requirements for new hires.

Written Standards, Policies, and Procedures for Human Resource Administration to include all recordkeeping and documentation, as well as the standard setup, filing requirements, and security of Employee Personnel Files.

An Outreach Program whereby the Human Resource Manager visits each club department head on a monthly basis to discuss needs and issues.

Without a well-defined, organized, and highly-disciplined Human Resource function clubs are inviting trouble in the form of time-consuming, costly, and potentially devastating legal action.Â The first step in protecting the club is to implement the above requirements, but beyond that the General Manager must ensure that all managers and supervisors are thoroughly trained in all HR requirements and scrupulously follow them.Â This is certainly not an area to leave to chance or hope for the bestâ€“the risk and cost of failure is too great!

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers â€” those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Developing leadership skills is not memorizing a list of things to do or not to do, though such lists are useful in helping students learn.Â Leadership is not the accumulation of managerial abilities, such as budgeting, computer skills, or the specific work skills of a particular industry, though such aptitudes will certainly enhance your overall skill set and add to your competence.Â Leadership is not a position or a title.

Successful leadership depends on the quality of relationships between a leader and followers.Â As such it entails relationship skillsâ€“the personal characteristics and abilities to connect with and inspire the enthusiastic efforts of a diverse group of people toward a common goal.

True leadership requires an understanding of what makes people tickâ€“individually and in group settings.Â It requires sensitivity to the needs and desires of others, even when they may not be able to adequately define or communicate these themselves.Â It requires openness and accessibility so followers are comfortable bringing their concerns and issues to the leader.Â It requires a person who is self-analytical, who examines every less-than-optimum outcome for improvement, often discovering a better way to interact with followers.Â It requires a person who puts the needs of the enterprise ahead of personal ambition, who recognizes that tending to the group welfare in a disciplined way will ultimately bring about better performance.

Finally, learning leadership skills is not a one-time event.Â Just as different endeavors and levels of organizations require different skill sets for managerial success, leadership skills must expand and develop as the individual moves up to higher levels of responsibility.Â Satisfactory leadership skills in a front line supervisory position are clearly inadequate for the challenges of a general manager, division manager, or president of a company.Â But the skills learned in the early years of one’s career will be the foundation for the broader skills necessary when one takes on greater responsibilities, particularly if you understand that true leadership is a lifelong journey, not a destination.

The Single Most Important Requirement to Becoming a Service-Based Leader

Becoming a Service-Based Leader is a transformative process; it’s about personal growth.Â The student must be prepared to challenge ingrained attitudes and beliefs about self and others.Â It requires a willingness to closely examine motivations and habits.Â The emerging leader must also be willing to accept personal responsibility for his or her life and decisions.Â But most of all it requires a great deal of personal honesty.Â Self-delusion and denial are the committed enemies of personal growth.

As you progress through The Workbook, make a promise to yourself.Â Promise that you will search the depths of your being to get to and understand your deepest motivations, not those that you glibly repeat because you have so often heard others say them and think they’re the norm.Â True leadership is not the norm, and becoming an effective leader will require you to step outside your comfort zone and confront the beliefs and attitudes you hold, not from conviction but from unexamined habit.

The Rewards of Service-Based Leadership

Developing the skills of a Service-Based Leader will reward you in a variety of ways.Â First and foremost, I believe the foundation of Service-Based Leadership and a recognition of the value of people in all you do, can, over the course of a career, lead you to the Level 5 Leadership that Jim Collins found at the top of all Good to Great companies.

Second, because Service-Based Leadership is all about developing successful relationships, it can bring success to other parts of your lifeâ€“your family relationships, your friendships, and the way you interact with people wherever you meet them.

Lastly, Service-Based Leadership will help you develop the self-analytical skills to examine life’s challenges and better understand how you react to them.Â Ultimately, it will help you to grow as a person and learn to face difficulties with greater equanimity and purpose.

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers â€” those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.